Restoring Australia’s productivity growth panel discussion

Restoring Australia’s productivity growth

Key points:

• National policy needs to focus on coordinated action on infrastructure, across industry and the tiers of government. • Rigorous analysis and thorough planning is the best way to depoliticise infrastructure. • Australia must remain ‘pro investment’ – including foreign investment.

Panellists:

► Marika Calfas, Chief Executive Offi cer, NSW Ports ► Dr Stephanie Fahey, Chief Executive, Austrade ► Peter Harris AO, Chairman, Productivity Commission

Moderator:

► Brendan Lyon, Chief Executive Offi cer, Infrastructure

Partnerships Australia

Brendan Lyon (BL): Australia is facing a lot of investment challenges right now. How do you see the current political, infrastructure and wider economic debate?

Marika Calfas (MC): I live in a world of ports and freight, which will form the basis of my contribution to the panel. Ports and freight underpin our national economy; however, public, political and regulatory recognition around the importance of ports and freight to the national economy is lacking. Ports and freight are vital to our global competitiveness in terms of exports, and in managing the cost of goods for consumers and businesses.

From NSW Ports’ perspective, there are a few core areas that require more attention if we are to continue to cater for the trade needs of New South Wales and Australia over the long term. The fi rst key area is infrastructure. We need to grow road and rail capacity to ports, and we need to address issues around urban congestion, as well as improving productivity through better access to and from ports.

Fundamental to this is the need to optimise utilisation of existing infrastructure, and to grow the capacity of ports. This

is not an issue about investment – it is about the regulatory context in which the ports and freight operate. For example, we have a planning system that imposes operational constraints by way of caps and limits, which constrains operators from utilising existing assets more efficiently. These issues are compounded by issues of urban encroachment. This is fundamentally a planning challenge – we operate in an environment where housing is prioritised over the needs of freight and industrial uses. It is vital that we protect existing infrastructure and access to ports, and preserve our industrial lands.

Another issue worth mentioning is the significant number of global operators that either invest or operate in the port space – they face very high costs of doing business in Australia, particularly from underlying costs, such as land taxes, regulatory compliance costs, labour costs and the cost of utilities. All of these underlying costs are influencing their investment decisions here.

Australia also has a fragmented port supply chain system. There are many stakeholders operating in port and freight supply chains who are constrained by the regulatory arrangements that exist, where integration is secondary to competition. This does not promote cost efficiencies, reduce costs or allow for innovation and flexibility.

On a positive note, freight in New South Wales and at the Commonwealth level has what is probably the highest profile it’s had in a very long time – possibly even ever. It still needs to be given a much higher priority, but it is in a much better place than it has been in the last 10 or 20 years. That’s recognised in transport departments in New South Wales, where we have freight departments, and freight and ports plans. At the national level, we are currently developing a national freight and supply chain strategy. This recognition needs to continue generally, but also in recognition of its importance to the economy.

BL: Thank you. Stephanie?

Dr Stephanie Fahey (SF): Austrade is responsible for exports and promoting investment into Australia. There are challenges that we’re facing in Australia today, particularly with Foreign Direct Investment (FDI) coming into Australia, and specifically into the infrastructure sector. There is no doubt that Australia’s economy has been built on FDI – one of the main challenges is keeping Australia open for business. Another challenge is maintaining the social licence to encourage foreign investment to come and assist with the infrastructure being developed. Australia cannot do this alone. We’re a relatively small country with a population of 24 million. We’re the 13thlargest economy in the world, but with such a small population, we can’t save fast enough to invest in the infrastructure that we need to remain globally competitive.

I think that one of the other issues is around not only maintaining social licence, but also ensuring that we take the whole economy forward with us. Look at what has happened in the United States and the United Kingdom, for example; if we

L–R: Peter Harris AO, Dr Stephanie Fahey, Brendan Lyon and Marika Calfas

ignore the spread of benefit across our communities, we do that at our own peril. Investment in infrastructure is actually a way of bringing various parts of the economy along, particularly in regional Australia. We need to keep the flow of FDI coming, but we must also keep an eye on where that investment goes to ensure that it’s inclusive. If we forget about that side of the story, then we will have bigger problems than what we anticipate.

BL: Peter, you professionally worry about all of these things. What’s worrying you about the economic and social state of Australia?

Peter Harris AO (PH): I think that it was in the job description. ‘Are you a born worrier? Yes? Excellent, you can go to the Productivity Commission.’

There are people in Canberra who call me a professional optimist because I keep pressing the Government to do things, so that requires some degree of optimism. The thing that bothers me most about the infrastructure debate is the continuing participation of politicians in characterising the other side’s infrastructure as being ‘bad infrastructure’, and theirs as being ‘good infrastructure’. This is an appalling way to conduct a discussion about something that genuinely matters to the future of the nation.

No wonder the public is confused about whether a project is ‘good’ or ‘bad’. They see both sides agreeing and disagreeing, and the next thing they see is an impediment to walking along Circular Quay or getting down George Street in Sydney, or getting across a railway crossing in Melbourne. No wonder the public is very doubtful about the nature of these projects. I could say that this is true of the current energy debate, as well.

The New South Wales Treasurer was dead right when he said, ‘The road to hell is paved with government interventions’. On interventions, it’s a question of what kind of interventions, and the quality of the interventions. The appalling thing here is seeing politicians spending no time at all on actually assessing whether a project is well planned and has positive objectives, or whether it is capable of delivering the project within the intended timeframe, at roughly the intended price. They seem to spend no time at all on good planning, but a lot of time saying, ‘It’s my project. It must be good. It’s your project, so it must be a dud’. No wonder the public is confused.

BL: Peter, the Productivity Commission undertook quite a big study into public infrastructure a couple of years ago. What are you seeing in the national infrastructure debate? Could you provide us with a distillation of what your report said, and also what you are and aren’t seeing in the national debate?

PH: The obvious bits of the report show that infrastructure is expensive. Of course it’s expensive – it’s being built in urban areas where land is expensive. That occupied about half the report, because that’s what the Government was primarily interested in. But at the same time, we gave them advice that said big unilateral interventions by government and the planning processes of infrastructure are quite often appalling. Where this is the case, it usually involves the press release first, followed by 18 months of analysis, then suppression of the analysis because it didn’t tell them what they wanted to know, then the budget allocation, then the subsequent budget allocation because that original number was ‘x’ and no-one understands the difference between that and ‘y’. But it’s a ‘budget blowout’, according to the media.

For something that is so important – something that is such an enabler of productivity in this country – we do construct and run these things quite badly. We didn’t just spend the rest of the report telling the Government that this is what you’re doing badly; rather, we put forward quite detailed propositions for them on how to do it better. The particular area that stuck out, because it is unlike almost every other part of infrastructure, was roads. When you are talking about electricity, water, airports, or even rail, consumers in some way pay towards the project cost directly. Therefore, there is some link between the user and the project selection. In roads, that is not the case. Apart from a small number of toll roads, we have a tax and a set of fees. Because of this, there is a lack of user connection to planning and project selection.

The Productivity Commission’s strong advice to Government is, if users were more heavily involved, you’d get better planning. Now, those people are not going to pay for the whole project, but if they can’t see the planning upfront, they will not see the value in it. This model is going to come, not because of what the Productivity Commission recommended or the fact that technology will enable it, it’s going to come because governments are going to run out of revenue to meet our expectations, because urban infrastructure is really expensive and we don’t have enough of it. What we’re not doing enough of is planning for that day. That’s in our report – three chapters were written entirely on how we should plan for that day.

BL: Thank you. Marika, you’re sitting over the National Freight Report Strategy. What’s it going to be? What’s it going to do? Do you think that it’s a little pre-emptive to be locking in on things like Inland Rail if we’re about to go through a strategic planning exercise?

MC: The National Freight and Supply Chain Strategy is the next phase in the work; the current phase is an inquiry into the National Freight and Supply Chain Strategy priorities. This phase won’t come out with a strategy – it is the intention, and my hope, that the next phase will move into a strategy piece. What the inquiry is now looking at are the priorities that should be dealt with in that strategy in terms of infrastructure, regulation, technology and productivity. This inquiry is also looking across different supply chains: import–export, interstate, domestic supply chains and different commodities, as well.

As part of that prioritisation, we’re having discussions about the use of freight performance indicators. This would be a way of measuring whether our performance in freight supply chains is meeting certain standards, and whether you could benchmark them internationally.

BL: So cost, time and reliability, those sorts of things?

MC: Those sorts of things. You could do that end-to-end through the supply chain. This would give us a way of actually measuring whether an infrastructure investment was effective, and to what extent it has been effective.

There are some complications though, particularly in relation to data availability.

I am not sure what the plan is in terms of actually developing the strategy. Investment decisions can’t really wait for that. But it is very important that prioritisation is part of the thinking in terms of funding allocation. Inland Rail is an example where you should ask, ‘Is this actually the highest priority in terms of the outcome you are trying to achieve?’

If Inland Rail is premised on improving freight efficiency, reducing the cost of freight and improving the speed of transport of goods, is investing $8.4 billion into Inland Rail the best way to achieve those freight productivity outcomes? Especially when there are a few unknowns in there, such as industry saying that it needs a connection to the Port of Brisbane and the Port of Melbourne? It needs connectivity into the New South Wales network, as well. These do not form part of the Inland Rail project, and would double the cost of the project.

The discussion around pricing and a user-pays systems is also very important. If Inland Rail is going to be an equity investment, then it has to recover its costs, and a bit more presumably. Will the price charged actually move freight from road to rail and in a freight route where volumes are not substantially growing? Presumably, you wouldn’t be trying to cross-subsidise the recovery of that cost across other aspects of rail. Rail is vital to our imports and exports, and it has the challenge of competing against road, which doesn’t have a user-pays pricing arrangement.

BL: Thank you. Stephanie, your job is to bring money and skills into Australia. There’s obviously a little bit of turbulence at the moment. What keeps you up at night about infrastructure?

SF: Austrade has 83 points of presence globally, and our job is to gather intelligence around what’s happening in all of those markets, for both our exports overseas and investment back into Australia.

What we see at the moment is major disruption to the infrastructure sector, with the way it’s being intercepted with government, with pricing and how revenue is collected. For example, we look at driverless cars, driverless buses, the share economy and the old way of collecting revenue by government. We see all these changes taking place globally, then we bring our view back to Australia, and we’ve got to get ready for the day when these changes come to Australia.

So, what keeps me awake at night is whether the planning that we’re currently doing is flexible enough for the disruption that’s occurring globally, particularly within mobility. But we also need to ensure that the public sector – more specifically, the public – and the private sector are working closely together so we’re able to keep in front of this curve. If we fall behind that curve, it’s going to create big problems for the business that we’re doing here in Australia.

BL: You’re still seeing a lot of interest in Australia, even with headwinds here?

SF: There’s a huge amount of interest in Australia. I mean, you just have to listen to the Treasurer of New South Wales, and he does create excitement globally. But we do face some challenges in Australia. We need to project Australia as being a very safe place to invest. If you compare Australia to other global investment opportunities, Australia stacks up well even though we tend to beat up on ourselves. But if you look at the investment environment here, investors are guaranteed ownership of their assets. You might think that the domestic political situation is a little bit rocky at the moment, but it doesn’t actually change what’s happening on the ground in terms of investor confidence.

Australia is still a very attractive place to invest, and we’ve got a huge amount of interest. A core part of Austrade’s role is to encourage that investment, and if it does incur any bumps in the road, we’ve got the specialists within Austrade whose job it is to talk to government, and to get them to try to iron out those bumps.

BL: They sound like they’ll be busy.

SF: They are busy.

BL: Peter, I just wanted to turn to a point that Marika made about the Inland Rail project and the accounting model, and the fact that we will have to recover its cost to remain on the balance sheet. A theme that we’re seeing increasingly in public infrastructure is ‘innovative finance’ or off-budget accounting. Unless I missed it, you declined to recommend that as a breakthrough in your study. What do you think policymakers and Treasury departments should be conscious of when they’re taking equity risks in this way?

PH: The Productivity Commission was approached in submissions to recommend a new infrastructure bank. We were approached to recommend that governments change their attitude to innovative financing. We did actually find some innovative financing options that governments could use – unsolicited project proposals are a very good example. I think that’s very wise, because not having that is just suppressing ideas, which is just anti-intellectual, anti-productivity, anti-everything; another horrible thought. But innovative financing in the sense of

suggesting that something could go ahead if it was off budget – because your debt profile would look better – is an extraordinarily poor way of deciding on a project. Everybody who’s here that works in the Treasury or has worked with the Treasury knows this. But again, it’s one of those populist things that rises up every couple of years in infrastructure. And everybody leapt upon that, such as by saying: ‘Glenn Stevens authorises a much larger amount of either debt or innovative financing for any infrastructure project you can possibly imagine’.

BL: He would be horrified if that’s what they thought he’d said.

PH: Subsequently, he did say that he was horrified by that accusation – that didn’t get much publicity. The Reserve Bank of Australia (RBA) has been careful since then. This reinforces why it is prudent to plan first through a proper allocative system, then look at what your financing options are. Sometimes, greenfield projects will be attractive to private investment. But you can only get an assessment of the financing options towards the end – once you know what your public interest objective is, you can look to see how you can marry that with a private interest objective. At that point, the private sector may be more efficient at building the infrastructure, or you may be prepared to put some risk capital into a project, as it is a medium- to long-term reliable investment.

That’s quite hard to do with greenfield projects because they are rather high risk. Some greenfield projects have come at a spectacular cost to the equity holders – that’s a natural part of being in the market. But the idea that you start out by considering the financing is a very poor one. You don’t start out by saying, ‘I’ve found a new way of innovative financing now. Where are some projects that I can throw this brand new financing model?’ And yet, you read that continuously. It’s a horrible mistake.

BL: Thank you. The New South Wales Treasurer has said, ‘The road to hell is paved with government intervention’. Next year, the Productivity Commission will be undertaking the five-yearly review of airport price regulation. In the lead up to that, how do you think the airports have performed post-privatisation? And what do you think the airlines, airports and other stakeholders will be arguing for? Will this be the next price re-regulation?

PH: We haven’t formally been asked to look at it, but I’ve heard that we’re getting it. There is a sort of tradition of us having another look at this on a reasonably regular basis. I have a conflict of interest in that I worked on the privatisation of all airports except Sydney Airport. I did the design of the pricing model.

I regularly say to people that the privatisation of Australian airports is the privatisation where: ► no-one went broke ► the Government got 10 times more than it expected for the assets ► we have not spent a dollar on anything other than extending the runway at Canberra Airport for George W. Bush’s 747.

So, it’s been a very successful privatisation. Airline prices have continued to fall, new systems have been put in place, and new terminals have been built, with the exception of Perth. Other than Perth, investments that have occurred on airports have improved the consumer experience, and, on balance, it looks pretty damn good to me, but I’m biased.

We do regularly get asked which airport operators are monopolies, being able to exploit consumers via their pricing strategies, and the Australian Competition and Consumer Commission (ACCC) is particularly interested in this question. In my mind, there two classes of consumer at airports. The first are airlines ranging from Qantas down to little regional airlines. Larger airlines have a particular kind of niche in the negotiation market envisaged for them in the original privatisation model, and, generally speaking, they probably wouldn’t want it. Some smaller airlines are quite exposed to the pricing issues that are pre-determined by the larger airlines. This can make it more difficult for smaller airlines to accept, especially in regional areas of Australia, if you are the only airline serving a Councilrun airport. In essence, even though the model of negotiating looks like it’s a relatively successful one, there are wrinkles worth examining for that class of consumer.

The second class of consumer people worry about is the general public. The question often asked is, ‘Are we paying more than we should to go to the airport or to use the airport?’ No-one makes you buy the stuff you walk past when you go to the airport. If the prices are high, you don’t have to buy anything. There’s an alternative for you: if you want to buy cheaper, buy things before or after you have left the airport. That brings you back to parking. I think that this is where the Productivity Commission could provide a value-add. I’d like to go back and look at what it costs to park anywhere else. It’s not whether the airport pricing’s high, but rather what the price relative to parking elsewhere with an equivalent level of convenience is. It’s not a question of simply saying, ‘The airport makes a profit out of parking, isn’t it outrageous?’ Because, when people are incentivised to develop a service and make a profit out of it, they provide a better service over time. That’s what we get with a market economy. Simply because an airport makes a profit out of the parking is not a bad thing per se. The question should be, is the pricing structure indicative of the fact that you have alternatives? The best way to look into that is to look for a counterfactual. A counterfactual will find an equivalent form of parking and see what they’re charging for that. If it looks acceptable, maybe that’s where the benchmark is. If it doesn’t look acceptable, maybe there’s a problem. To tackle this issue, you need to proceed logically and analytically, and that’s what we would probably do.

BL: Thank you very much. What would you all like to see political agreement on in infrastructure?

MC: It would be really great to get bipartisan agreement on the fact that freight is strategically important to the economy. This includes having conversations with the public to broaden public awareness of the importance of freight, supply chains and ports to the national economy. And flowing from that, the regulation needs to support that objective – everything from planning systems through to funding mechanisms and prioritisation.

BL: So, really establishing a freight market is what you’re really saying?

MC: Absolutely. I also think that they should agree to fund the Port Botany rail line duplication. Those would be my two picks.

BL: Stephanie, any points of agreement and any pet projects that connect to your house? They’re all welcome.

SF: Australia being open for business should be bipartisan. Politicians on both sides regularly say it in passing, but I would like to see it top of the agenda. Australians should be very confident about our future, but we should not be complacent.

The second thing I’d like to see bipartisan agreement on is around clarity with FDI coming into Australia. Most foreign investors are aware that there’ll be some investments that are not open to them and others that are, but they need clarity around what these are. They don’t want to be spending a lot of time preparing for certain projects and finding out later that they cannot invest. So, I think we need early clarification around what’s on the agenda and what’s off the agenda, that needs to be bipartisan.

BL: Any pet projects?

SF: No pet projects in particular.

BL: Peter, you hate pet projects, so what would you like to see agreement on?

PH: No pet projects is number one. Firstly, I hope we can move away from the culture where a project is labelled as a ‘bad project’ just because the other side of politics came up with it. It’s a bad project if it’s poorly planned, allocation is bad, there’s no pricing structure involved, and there is the extraction of large amounts of rent from one user group to another user group without any compensating benefits. There are a thousand reasons a project could be labelled a ‘bad project’, but it’s not because it came up under one political party or the other.

The National Broadband Network (NBN) is an example of this. Its label as a good or bad project is entirely dependent on the politics of the person. In New York, Verizon built an equivalent of the NBN around New York. It wasn’t controversial, and in three years it was finished. New Zealand has done its own version of the NBN, and it wasn’t controversial. It did involve government intervention, but nevertheless it’s a good outcome. The idea that we would invest heavily in fibre for the purpose of data movement to support an economy… of course we would do that, but the question is how, and how effectively can we plan to do it and manage the right forms of criticism? However, the debate around the NBN is labelled as good or bad depending on your politics.

The second area is road pricing, and it doesn’t mean you get the sharp stick out …

Peter Harris AO

BL: There’s going to be a flashing sign down here that says, ‘Save Road Pricing’.

PH: At a recent forum at the University of Sydney, I surprised a group of academics by telling them, ‘I don’t think congestion pricing is the right model for you when you talk about road pricing’. Do not think the first step for road pricing is congestion pricing. Congestion pricing is not a bad thing, but the greatest benefits that will come from an effective road pricing structure are the shifts in the allocation. That is, that you fund projects that users are willing to pay for. This is a statement of the bleeding obvious, but it is not currently happening – users don’t get a say.

The road pricing structure in our 2014 inquiry into Public Infrastructure was one that involved users having a direct say in infrastructure. You might ask, ‘Well, how did that occur?’

And we’ve said, ‘Well it’s pretty simple – we’ve got this thing called the National Roads and Motorists Association’. They’re quite capable entities and they could be involved in the decisionmaking, but so could a heavy-vehicle users group. We increasingly expect them to pay for road use, so it seems logical to involve them first in the allocation process. Our 2014 report found that 70 or 80 per cent of the potential benefits of a different pricing system lie in the selection of the right projects. It’s about allocation. We know that this reform will come about because Treasurers need the revenue, but road pricing reform is about allocation. Getting allocation right will mean we get the right selection of projects.

Marika Calfas – Chief Executive Offi cer, NSW Ports

Marika Calfas is the Chief Executive Offi cer of NSW Ports, the private sector organisation responsible for managing the ports of Botany and Kembla, and the intermodal terminals at Cooks River and Enfi eld.

Ms Calfas has over 16 years’ experience in the port sector across a broad range of portfolio areas, and was appointed as the Chief Executive Offi cer of NSW Ports in December 2015. Ms Calfas commenced with NSW Ports at its inception in June 2013, and led the development of the NSW Ports Long-term Master Plan, released in October 2015.

Prior to NSW Ports, Ms Calfas held senior positions at Sydney Ports Corporation and Sinclair Knight Merz. At Sydney Ports, she was an integral part of the delivery of the $1 billion Port Botany Expansion development project.

Ms Calfas is a Board member of Ports Australia; Australian Logistics Council; and PIANC Australia (the International Waterborne Industry Association). She is also Australia’s representative to PIANC’s International Environmental Commission. Ms Calfas is also a member of the Infrastructure Partnerships Australia’s National Advisory Board.

Ms Calfas has been appointed to the Expert Panel by the Commonwealth Minister for Infrastructure and Transport, and is advising the Inquiry into the National Freight and Supply Chain Strategy Priorities.

Ms Calfas has a degree in Environmental Engineering, together with a Master of Engineering Management and Masters of Environmental Law, and is a Chartered Professional Engineer with Engineers Australia.

Dr Stephanie Fahey – Chief Executive Offi cer, Austrade

Dr Stephanie Fahey is the Chief Executive Offi cer of Austrade, the Australian Government agency responsible for promoting trade, investment and international education, and tourism policy, programs and research.

Dr Fahey has over 30 years’ experience both as an academic and as an executive, working in Australia and overseas.

Previously, she was EY’s lead partner for education in the Oceania region, Deputy Vice Chancellor (Global Engagement) at Monash University, and Director of the University of Sydney’s Research Institute for Asia and the Pacifi c. Dr Fahey brings an international perspective to her work and a wealth of experience across business and academia.

Austrade’s fi rst female chief executive, Dr Fahey has also served on the Australia China Business Council, the Australia China Council, the New South Wales International Education Advisory Board, the European Australian Business Council, the Board of Canberra Institute of Technology, the Foreign Affairs Council and the Australia Korean Foundation.

Dr Fahey holds a PhD from the Australian National University and a Bachelor’s degree with honours from the University of Sydney. She speaks Melanesian Pidgin. She was inducted as a Fellow of the Australian Institute of Company Directors in 2012.

Peter Harris AO – Chairman, Productivity Commission

Peter Harris is Chairman of the Productivity Commission. Mr Harris has previously served as Secretary of the Commonwealth Department of Broadband, Communications and the Digital Economy, and the Victorian Government agencies responsible for sustainability and the environment; primary industries; and public transport.

Mr Harris has worked for the Ansett-Air New Zealand aviation group and as a consultant on transport policy. He has also worked in Canada on exchange with the Privy Council Offi ce (1993–1994). His career with the government started in 1976 with the Department of Overseas Trade and included periods with the treasury, fi nance, the Prime Minister’s Department and transport. He worked for two years in the Prime Minister’s offi ce on secondment from the Prime Minister’s Department as a member of then–Prime Minister Bob Hawke’s personal staff.

In 2013, he was made an Offi cer of the Order of Australia ‘for distinguished service to public administration through leadership and policy reform roles in the areas of telecommunications, the environment, primary industry and transport’.

Mr Harris has a degree in Economics from the University of Queensland.

Brendan Lyon – Chief Executive Offi cer, Infrastructure Partnerships Australia

Brendan Lyon is the Chief Executive of Infrastructure Partnerships Australia (IPA), the peak infrastructure policy partnership between Australia’s Commonwealth and state governments, and the business sector.

Joining IPA on its formation 11 years ago, Mr Lyon initially led the policy and research team, before being appointed Chief Execuive Offi cer in early 2008. Through strong, evidence-based public policy, good research and strong relationships across the business, media and government sectors, IPA has developed into a respected and trusted voice on economic and social infrastructure policy.

Mr Lyon also serves on a range of boards, committees and government inquiries; is a Member of the Australian Institute of Company Directors; and holds a Masters of Business Administration with Distinction. In 2013, Mr Lyon was appointed an Honorary Associate Professor at the Sydney Business School.

Driving public transport into a brighter future

Transdev’s innovations in on-demand, autonomous bus services are solving key transport problems.

René Lalande, Chief Executive Officer, Transdev Australasia

Transdev Australasia is helping shape the future of public transport with groundbreaking, cost-effective solutions for communities and governments.

In an Australian first, the transport innovator, in November 2017, launched a trial of on-demand bus services in two Sydney suburbs. Transdev also sees potential for autonomous buses, and bus rapid-transit services that are an alternative to light rail in some cities.

‘Transdev is re-imagining public transport,’ says Chief Executive Officer René Lalande. ‘As urban populations grow, we need new thinking for longstanding transport problems. We need affordable transport solutions that energise cities by making them more accessible for everyone.’

Collaboration, says Lalande, is critical because governments worldwide are under pressure to sustain public transport investment. ‘Cities need technology-driven, integrated multimodal transport solutions that maximise every possible efficiency. Smarter use of buses, for example, can solve several problems and take significant cost out of public transit systems.’

Transdev’s trial of on-demand bus services in Sydney’s Manly and Rose Bay suburbs is an example. In conjunction with Transport for NSW, Transdev is launching a pilot program that, if successful, will run in four tranches over two years.

Transdev has developed an online interface that allows residents to signal if they need a shuttle bus to take them to Manly or Rose Bay wharves. A software algorithm analyses the data to optimise the most efficient route to pick up passengers.

These new bus services have outstanding potential. For consumers, on-demand buses are more convenient than fixed-route ones, and there is extra incentive to use public transport rather than drive to a wharf and park nearby. For governments, on-demand bus services could replace some fixed-route services that run when demand is low and waste resources.

‘On-demand buses help solve the “last mile” transport problem for consumers,’ says Lalande. ‘Too many consumers are forced to drive all or part of their journey because there is no public transport solution between their house and a train or ferry. Imagine ordering a public shuttle bus through a smartphone app, like consumers order a car through Uber.’

Transdev has successfully introduced on-demand bus services in Europe and the United States. The results showed on-demand buses drove fewer kilometres, and thus consumed less fuel and had fewer emissions than fixed-route buses. Patronage of on-demand bus services increased because they were a more convenient option than using cars.

Lalande says modern urban transportation systems need a mix of fixed-route and on-demand bus services. ‘It makes no sense having buses go around and around on fixed routes when they’re half empty. Or having buses that cannot pick someone up at their doorstep. If six people need a public shuttle bus to get somewhere, they should be able to order it.’

Pioneering work

Transdev is launching an Australian roadshow for its autonomous shuttles capabilities in 2018 as part of a global initiative. The company wants to demonstrate driverless shuttles that allow for six seated and six standing passengers, pending government approval.

Transdev is a global leader in autonomous transport: its driverless vehicles have transported more than 2.5 million passengers across 350,000 kilometres since 2005.

In 2016, Transdev began operating autonomous vehicles at

France’s EDF Civaux Nuclear Power Plant – the world’s first commercial contract for this kind of service. In February 2017, Transdev and Renault–Nissan signed a contract to develop on-demand, driverless, electric vehicle fleet technologies.

Lalande says buses have a key role in autonomous transport. ‘Most talk so far has focused on autonomous cars; however, if we don’t pay sufficient attention to the challenges of autonomous cars, we could worsen traffic congestion by having more cars do more journeys in cities. Larger shuttles are ideally suited to autonomous driving because most of them operate on a fixed route and are more predictable than cars.’

Autonomous shuttles save significant labour cost, enabling lower bus fares that encourage higher patronage and less use of cars. ‘Again, it’s about maximising every dollar of public investment in transit systems,’ says Lalande. ‘Transdev has demonstrated overseas that autonomous shuttles are cost-effective and reliable. We can adapt our autonomous and on-demand bus technologies to Australian conditions and demonstrate their safety.’

Transdev’s bus rapid-transit technology is another emerging option for public transit authorities. These systems involve bus shuttles, usually joined together, that have a dedicated lane. The system broadly operates like light rail, with up to a third of light rail passenger capacity.

Transdev has pioneered bus rapidtransit services in Bogotá in Colombia and the French cities of Rouen and Nantes. Transdev sees these services shaping how many cities operate into the future. The systems operate as an express bus way, allowing for a high-frequency, highcapacity service offering to customers. ‘We firmly believe that bus rapid-transit systems can be a cost-effective, attractive part of the future transport mix in Australian cities,’ says Lalande.

Bus rapid-transit technology is timely as more state and territory governments, and regional cities, invest billions of dollars in light rail infastructure. ‘Light rail has an important role in modern urban transit systems,’ says Lalande. ‘But in certain circumstances, bus rapid-transit systems can achieve a similar result at a fraction of the investment needed for light rail and be implemented much faster to address traffic congestion.’

Strong foundations for transport innovation

As the largest provider of multimodal transit systems in Australasia, Transdev is uniquely positioned to lead transport projects. Transdev Australasia is responsible for more than 145 million customer journeys each year across seven cities in Australia and New Zealand. The business has more than 5,700 employees in its trans-Tasman operations.

Transdev operates key bus services in Brisbane, Melbourne, Perth and Sydney; ferry services in Brisbane and Sydney; and Sydney’s light rail system since 1998. It also operates rail services in Auckland and Wellington.

Lalande says Transdev offers Australian clients the best of both words. ‘We have a proud history in this market and a large multimodal operation, so we deeply understand local conditions and the transport needs of communities. We are also part of a leading multinational transport company that operates in 19 countries across five continents. We’re able to take the best transport innovations worldwide and tailor them to Australia.’

Transdev’s passion for public transport is reflected in its PACE concept: personalised, autonomous, connected and electric transport for all. ‘We see a future where consumers will use public transport when they need it, not wait for it to show up,’ says Lalande. ‘A future where autonomous vehicles seamlessly connect across transport modes to create stronger outcomes for communities, governments and the environment.’

Lalande says great public transport systems connect people to communities. ‘Nobody wants sprawling outer suburbs in large cities with poor transport options. Or commuters who have no option but to drive long distances each day for work and risk becoming disconnected from their community.’

Governments, says Lalande, have the will to innovative public transit systems, but cost is the recurring problem. ‘Governments worldwide can’t just keep spending billions of dollars to retrofit transit systems in major cities. They need technology-led solutions that solve macro and micro transport challenges and create a more efficient mix of public transit options.’

Lalande says Transdev is thinking differently about what public transport looks like in the digital economy. ‘We’re incredibly passionate about the future of transport and the benefits for cities and communities. That future is knocking on the door. We have to embrace it.’ ♦

To learn more about Transdev Australasia, visit www.transdev.com.au.

Passionate about water

Australia’s leading private water utility, TRILITY, is continuing its nationwide growth, with its latest successes ranging from the far south to the far northern tip of the country. Securing such diverse work in such varied locations is a clear testament to the company’s impressive capabilities.

The new Launceston facility

TRILITY has recently been awarded the contract for the installation of eight water treatment plants, costing around $13 million. This contract forms part of TasWater’s Regional Towns Water Supply Program.

The work will be carried out in conjunction with Hydramet, a member of the TRILITY Group, which recently opened a new office and warehouse facility in Launceston, significantly increasing its presence there and reinforcing its commitment to the Tasmanian water sector.

Hydramet will manufacture the treatment plants in module form at its Launceston base, and then install them at Bronte Park, Conara, Cornwall, Gladstone, Herrick, Mathinna, Rossarden and Wayatinah.

Another recent success for TRILITY is the signing of a three-year-plus contract extension to provide services to five Indigenous communities, located approximately 1,000 kilometres north of Cairns at the northern tip of Cape York, known as the Northern Area Peninsula.

The work, which is usually contracted every 12 months, involves operating and maintaining a raw water collection and transfer station, a membrane water treatment plant and a treated water distribution system.

Some 80 per cent of TRILITY staff working on the project are local, representing an important skilled employment and training opportunity.

Established in 1991, TRILITY is now working with statutory authorities and companies around Australia to upgrade and manage critical water assets, design and construct water infrastructure, and finance and own water assets and projects.

Operating and maintaining more than 41 plants and schemes, as well as hundreds of kilometres of irrigation pipeline networks across the country, and Australia’s largest biosolids facility, TRILITY is responsible for assets that provide water to millions of Australians in both urban and regional areas.

Led by Managing Director Francois Gouws, TRILITY is also working to transform ageing water infrastructure, and leading the way in water recycling initiatives Australia-wide.

‘At TRILITY, we’re passionate about what we do – helping to protect and direct our precious water resources for Australia’s economic and environmental future,’ says Gouws.

An Australian-run company with strong international shareholders, TRILITY brings with it outstanding global expertise and a wealth of local knowledge, developed over two decades.

With some of its contracts stretching back more than 20 years, TRILITY maintains strong relationships with water authorities, government departments and industry bodies.

Indeed, this capacity to successfully partner with government and industry is reflected in its projects: 24 water treatment and desalination plants; 15 wastewater treatment and re-use plants/schemes; two irrigation schemes; and Australia’s largest thermal biosolids facility at Geelong, Victoria.

In South East Queensland, TRILITY was selected to design, build,

operate and maintain the Redcliffe Sewage Treatment Plant upgrade. In Western Australia, TRILITY is part of the Helena Water consortium, which delivered the $300-million Mundaring Water Treatment Plant.

Across regional Victoria, TRILITY operates various water and wastewater treatment plants, along with the state’s largest irrigation scheme and biosolids facility.

In South Australia, it operates the state’s international award-winning desalination plant with its joint venture partner. It also operates the many water treatment facilities that service more than 90 communities along the River Murray and the Virginia pipeline scheme, providing irrigation services to the communities north of Adelaide.

TRILITY also has a footprint in New Zealand, where it plays an essential role in protecting the environment, while supplying essential services to the community it serves.

For everyone at TRILITY, ongoing success is their driving force.

‘Our strategy is working – TRILITY has met every financial target set by its shareholders over the past five years, and continues to win new contracts and find efficiency gains,’ says Gouws.

‘TRILITY has an incredible workforce that is very passionate about water. We have invested heavily in staff and systems, and a core part of my role is to maintain and enhance our exceptional culture.

‘We also pride ourselves on being innovative, nimble and adaptable,’ says Gouws.

‘Water is a vital resource, and apart from that, the only certainty is change. Communities and industries change, and even the climate changes, so at TRILITY, we’re determined to keep adapting so we can continue to make an important contribution to Australia’s future.’ ♦

Water is our business

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Mundaring Water Treatment Project (WA) Northern Peninsula Area Operations and Maintenance (QLD)

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www.trility.com.au